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2017 (7) TMI 346 - AT - Service TaxCENVAT credit - input services - club services - whether the appellant who is a manufacturer of excisable goods, is eligible to avail CENVAT credit of the service tax paid by the various service providers or otherwise? - Held that - input service means any service used by manufacturer whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products. It is undisputed that appellant is a manufacturer of dutiable final goods and hence the CENVAT credit availed on the above services is correctly availed by them and to that extent, the impugned order is in error holding that CENVAT credit needs to be rejected. CENVAT credit - insurance for vehicles - Held that - the CENVAT credit availed of ₹ 7,711/- on the insurance for the vehicles after 01.04.2011 is also to be held as ineligible CENVAT credit and the appellant is directed to reverse the same along with interest - appellant is required to discharge the amount of interest. Penalty - Held that - Since the issue is of interpretation of the provisions of Rule 2 (l) of the CENVAT Credit Rules as to the availment of CENVAT credit on the various input services received by them, the penalty is not warranted. Appeal allowed - decided partly in favor of appellant.
Issues: Eligibility of manufacturer to avail CENVAT credit on service tax paid by service providers for various services.
Analysis: 1. Issue of Eligibility for CENVAT Credit: The main issue in this appeal was whether the appellant, a manufacturer of excisable goods, could avail CENVAT credit of the service tax paid by service providers. The appellant had availed service tax credit on services like vehicle maintenance, club membership, and various insurances. The Revenue argued that these services were not used for providing output services for which the appellant was registered. However, the appellant explained that these services were essential for their business operations, such as transporting staff and entertaining clients. The appellate tribunal found that the appellant, being a manufacturer of final goods, was eligible to avail CENVAT credit on these services as they were directly or indirectly related to the manufacture of final products. 2. Analysis of Specific Services: The tribunal examined each service individually. For services like vehicle maintenance, club membership, and certain insurances availed before 1st April 2011, the tribunal ruled in favor of the appellant, allowing the CENVAT credit. However, for residence flat insurance and civil aid insurance, the tribunal found the details provided by the appellant to be insufficient and ordered the reversal of the credit. Additionally, for insurance on vehicles after 1st April 2011, the tribunal noted the amendment in the definition of input services, excluding such services from CENVAT credit eligibility. Therefore, the credit availed on vehicle insurance after the specified date was deemed ineligible, and the appellant was directed to reverse the credit along with interest. 3. Penalty Consideration: The tribunal concluded that since the issue revolved around the interpretation of CENVAT Credit Rules, and the appellant's actions were not deliberate, imposing a penalty was deemed unnecessary. The appeal was disposed of accordingly, with specific directions for each type of service credit availed by the appellant. In summary, the appellate tribunal allowed the appellant to avail CENVAT credit on services directly or indirectly related to the manufacture of final products, while also specifying instances where the credit was ineligible based on the timing and nature of the services. The judgment highlighted the importance of providing detailed explanations for availed credits and the significance of adhering to the amended rules for CENVAT credit eligibility.
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